India’s Nifty Index Futures Rise on Foreign Buying, Rupee Rally

Indian stock-index futures gained as the rupee extended a rally and international investors bought the nation’s shares after three straight months of net sales.

SGX CNX Nifty Index futures for September delivery rose 0.5 percent to 5,961 at 10:01 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 0.3 percent to 5,913.15 yesterday. The S&P BSE Sensex closed unchanged. The Bank of New York Mellon India ADR Index of U.S.-traded shares fell 0.1 percent, the first drop in six days. One-month rupee forwards rose for a sixth day to 63.99 per dollar.

India’s rupee rose for a fifth day yesterday, the longest winning streak since October, on speculation the supply of dollars into India is increasing after global funds boosted holdings of local stocks. International investors bought a net $ 421 million of Indian shares on Sept. 10, the most since May 21, data from the market regulator showed yesterday. That boosted this year’s net inflow to $ 12.2 billion, the second-highest among 10 Asian markets tracked by Bloomberg.

“Foreign fund-buying is supporting the market to a great extent,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by e-mail.

Foreign investors bought a net $ 344 million of Indian (SENSEX) stocks last week, the most since the week ended May 31. They pulled $ 3.7 billion from local equities in the three months to Aug. 31. Capital fled the country amid the slowest economic growth in a decade, an unprecedented current-account deficit and a weakening currency, and on speculation the U.S. Federal Reserve would pare its record stimulus program.

RBI Governor

The Sensex climbed 3.5 percent last week, the most since the five days ended April 19, after the new Reserve Bank of India Governor Raghuram Rajan announced plans to boost the financial sector and support the rupee, which dropped to an all-time low on Aug. 28.

The rupee has rallied 5.9 percent, the most among Asian currencies tracked by Bloomberg, since Rajan took over at the central bank on Sept. 4.

The Sensex has increased 2.9 percent this year in local currency terms and is valued at 14.2 times projected 12-month earnings, compared with the five-year average of 14.1 times, data compiled by Bloomberg show. It has lost 12 percent this year in dollar terms. The MSCI Emerging Markets Index trades at 10.5 times.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net